Accurate records should be maintained of the cost and accumulated depreciation of all capital assets including property, plant and equipment.

General:

The acquisition of capital assets should be organized to ensure that no unauthorized acquisitions have been made and that records of each acquisition are accurate, complete, and recorded in the appropriate period.

Responsibility

Receiving Department

Action
The physical receipt of all purchased goods should be the responsibility of the designated department.
The receiving department should inspect goods for conformity with specifications on purchase orders.
All capital assets should be identified upon their receipt by the use of a pre-numbered tag obtained from the Finance Department.
The tag should be permanently affixed in a readily visible area.

Responsibility

Accounting Department

Action
Record the property number on the tag in the detailed fixed asset ledger.
Record the location of the asset installation in the detailed fixed asset ledger.
Maintain accurate and complete detailed fixed asset ledgers.
Post asset additions, disposals and period depreciation to the detailed ledger.
Reconcile the detailed fixed asset ledger to the general ledger for asset cost and accumulated depreciation annually. Investigate and resolve differences disclosed in the reconciliation.
A Director of Finance should review the results of the reconciliation before any adjustments to the account are recorded. Such review should be evidenced by a signature.
Construction in progress should be capitalized.
No depreciation should be taken on construction in progress.
Upon completion of construction and placement in service, the asset should be removed from construction in progress and entered into the detailed fixed asset ledger in the appropriate classification. If the asset is not an eligible infrastructure capital asset reported under the Modified Approach, depreciation should now be taken on the asset.

Additions to Capital Assets

07/11/2016

Additions to Capital Assets

Policy:

All additions to capital assets should be properly authorized

Capital assets include property, plant and equipment assets having an estimated useful life of at least two (2) years following the acquisition date

Capital assets should be reported at historical cost. The cost of a capital asset should include capitalized interest and ancillary charges necessary to place the asset into its intended location and condition for use

Items with useful lives less than two (2) years or of small monetary value (less than $5,000 per unit cost) are reported as an expense or expenditure in the period in which they are acquired

Control over non-capitalized capital-type items is maintained by adequate control procedures at the department level

General:

Property, plant and equipment are generally categorized by the following broad asset types:

Asset Type: Estimated Useful Life:

Capital leases Lease term

Mains and extensions 10-65 years

Land Inexhaustible

Buildings 10-15 years

Autos and equipment 3-10 years

Furniture and equipment 3-10 years

Responsibility

Accounting Department

Action

Record additions of capital assets in the detailed fixed asset sub-ledger

Reconcile the detailed fixed asset sub-ledger to the general ledger.

Investigate and resolve differences found in the reconciliation.

Procedure Coordinator: Director of Finance

Additions to Infrastructure Capital Assets

07/10/2016

Additions to Infrastructure Capital Assets

Policy:

All additions to infrastructure capital assets should be properly authorized.

Infrastructure capital assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure capital assets are roads, sidewalks, bridges, drainage systems, water and sewer systems, dams and lighting systems.

Infrastructure capital assets should be reported at historical cost. The cost of an infrastructure capital asset should include capitalized interest and ancillary charges necessary to place the asset into its intended location and condition for use.

Valuation for infrastructure capital assets acquired prior to implementation of GASB 34: Estimated historical cost is reported for general infrastructure capital assets if determining the actual historical cost of those general infrastructure capital assets is not practical because of inadequate records.

Expenditures to preserve the useful life of eligible infrastructure capital assets that are reported by the Modified Approach should be expensed in the period incurred. Additions and improvements to eligible infrastructure capital assets that increase the capacity or efficiency of the infrastructure assets should be capitalized.

Items with useful lives less than two (2) years or of small monetary value (less than $5,000 per unit cost) are reported as an expense or expenditure in the period in which they are acquired.

General:

Infrastructure capital assets are generally categorized by the following broad asset types.

Asset Type Estimated Useful Life

Roads 20-35 years

Water and sewer mains and extensions 30-65 years

Drainage Systems 10-35 years

Responsibility

Accounting Department

Action

Record additions of infrastructure fixed assets in the detailed fixed asset sub-ledger.

Reconcile the detailed fixed asset sub-ledger to the general ledger.

Investigate and resolve differences found in the reconciliation.

Procedure Coordinator: Director of Finance

Depreciation of Capital Assets

07/09/2016

Depreciation of Capital Assets

Policy:

The cost (less salvage value) of all exhaustible capital assets should be allocated (depreciated) over the estimated useful lives using the straight-line method.

The useful life should be determined when the asset is acquired.

Amortization of capital leases is included in depreciation expense.

Depreciation expense that can be specifically identified with a function should be included with its direct expense in the statement of activities (full cost allocation approach as used in GASB Statement 34).

Depreciation expense for general infrastructure capital assets should be reported as a direct expense of the function normally associated with capital outlays for, and maintenance of, general infrastructure fixed assets or as a separate line in the statement of activities.

Valuation for infrastructure capital assets acquired prior to implementation of GASB 34: Estimated accumulated depreciation is reported for infrastructure capital assets if determining the accumulated depreciation of general infrastructure capital assets is not practical because of inadequate records.

Depreciation expense is not reported for eligible infrastructure capital assets that are reported by the Modified Approach.

General:

Capital assets are generally categorized by the following broad asset types.

Asset TypeEstimated Useful Life

Roads 20-35 years

Water and sewer mains and extensions 30-65 years

Drainage Systems 10-35 years

Capital leases Lease term

Land Inexhaustible

Buildings 10-15 years

Autos and equipment 3-10 years

Furniture and fixtures 3-10 years

Responsibility

Accounting Department

Action

Record depreciation expense of capital assets.

Reconcile depreciation expense and accumulated depreciation in the detailed fixed asset sub-ledger to the general ledger.

Investigate and resolve differences found in the reconciliation.

Results of the reconciliation should be reviewed and approved by the Director of Finance before any adjustments are recorded. Such review should be evidenced by a signature.

Modified Approach for Infrastructure Assets

07/08/2016

Modified Approach for Infrastructure Assets

Policy:

Infrastructure capital assets accounted for under the Modified Approach will be managed using an acceptable Asset Management System.

The City will document that the eligible infrastructure assets are being preserved approximately at (or above) a condition level established by the City.

Depreciation expense is not reported for eligible infrastructure capital assets that are reported by the Modified Approach.

Expenditures to preserve the useful life of eligible infrastructure capital assets that are reported by the Modified Approach should be expensed in the period incurred. Additions and improvements to eligible infrastructure capital assets that increase the capacity or efficiency of the infrastructure assets should be capitalized.

When used, the Modified Approach should be applied to eligible infrastructure assets composing either a network or a subsystem, and should be applied to all assets within the chosen network or subsystem

The City will no longer use the Modified Approach for eligible infrastructure assets if it fails to meet the above requirements for those assets

Responsibility

Responsible Department

Action

Meet the following minimum requirements of an acceptable asset management system.

Report an up to date inventory of eligible infrastructure assets.

Perform and document replicable condition assessments of the eligible infrastructure assets and summarize the results using a measurement scale in a consistent manner at least every three years.

Document the results of the three most recent complete condition assessments showing that the eligible infrastructure assets are being preserved at or above the condition level established and disclosed by the City.

Estimate each year the annual amount to maintain and preserve the eligible infrastructure assets at a condition level established and disclosed by the City.

Responsibility

Accounting Department

Action

Disclose the Required Supplementary Information in the Comprehensive Annual Financial Report for eligible infrastructure assets using the Modified Approach.

Procedure Coordinator: Director of Finance

Disposal of Fixed Assets

07/07/2016

Disposal of Fixed Assets

Policy:

Disposal of capital assets should occur only after proper authorization has been given.

General:

Control over the disposition of property should be maintained not only to preserve the accuracy of the records but also to ensure that assets are safeguarded, improper disposal is avoided, and the best possible terms are received for disposal.

Responsibility

Responsible Department

Action

Complete a Disposal Form for all disposals.

The Department head will review the Disposal Form.

Responsibility

Accounting Department

Action

Review the Disposal Form to verify the retirement/disposal is properly approved and documented.

Remove the cost from the appropriate asset account; the related accumulated depreciation, including depreciation to date of the disposal; and the profit or loss, adjusted for the cost of removal, should be recorded as an income (gain) or expense (loss) item.

When the disposal is via a trade-in of a similar asset, the acquired asset should be recorded at the book value of the trade-in asset plus any additional cash paid. In no instance should the cost exceed the fair market value for the new asset.

Fully depreciated assets should remain on the property records with the related accumulated depreciation as long as the property is still in use.

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